At least under English law, what qualifies as FM depends only upon the wording of the relevant contract clause. Just because a situation such as Covid is known at the time of contracting does not I believe, of itself, prevent a party relying on an appropriate clause providing you can bring yourself within the wording. Of course, if the relevant clause limits FM to matters 'not reasonably foreseeable' then that would be another matter but many clauses do not do so.

• Schneider Electric
•
2020-05-14 08:35:14

Good question. I am currently in this situation whereby I am negotiating another new similar project with the same customer. Sue to the similarities, we are merely updating the T&Cs from the older (now almost complete contract). They are permitting us to make some minor adjustments to the terms of this new contract. I see the potential re-occurrence of Covid-19 in the fall as no longer being 'unforeseen' so may be an issue relying on FM if required eg. if we are delayed as a result, for this reason, I am asking for 'Covid-19' to be named as one of the causes under the Contract ie. added to the list of FM events named in the contract. My colleague in legal is helping me to pull the wording together atm. This is my proposal for dealing with this potential risk.

Thanks so much for your message and yes we are gathering lots of "good news" stories and as you say, examples of how organisations are demonstrating their agility and adaptability in times like this. Thank you for sharing the story of Meex - I will personally look this up and add it to the output that we are generating. We are indeed focusing on how IACCM supports small businesses more and more and I like your idea about a blueprint for agility. Thank you again and please do keep your ideas coming - they are much appreciated! Sally

Hi - at my workplace we are mainly dealing with FX related claims that are being submitted as force majeure. In these cases, they are (b) - in that did the party have an opportunity prior to the FM event occurring to reasonably speaking, manage and treat the risk.

• BT
•
2020-04-29 14:33:13

Hi
! disclaimer - I don't know anything about Australian law !

but I don't see how option a) can be reasonable.

Risks can appear as time goes by due to changing circumstances and something that is not reasonably foreseeable at one point in time could well be later on.

• IACCM
•
2020-05-05 07:35:51

My apologies for the delayed reply to your question.

In general, the clause is referring to an issue that you could reasonably have anticipated and therefore could have prepared for it in some way. That means not only before inception of the contract, but also during its performance.

Even in a case where Force Majeure applies, there is a duty to take reasonable measures to mitigate its effects.

In the case of the pandemic, there are many debates over whether and in what circumstances it represents a Force Majeure event. However, even when disallowed, there may be grounds for claiming frustration of contract or impossibility of performance due to related events.

Hi Marina, thank you for your question and of course this is a critical issue for many of us right now. You may be interested to see Tim's Blog on this very point from earlier this week:

commitmentmatters.com/2020/02/18/coronavirus-and-force-majeure/

We have also launched a survey today which has already generated hundreds of responses and we will be putting out a report on the results early next week so please watch out for that.

I hope this helps and please do let us know if you have further specific questions.

• Cadent Gas Ltd
•
2020-02-29 09:14:13

There are multiple ways to be honest, including Force Majeure clauses and Business Continuity obligations on the supplier which are regularly tested.

• Vaisala Inc.
•
2020-04-03 21:15:33

We have recently added a statement to all quotes to customers with regard to COVID19, namely that it is now a 'known' event and given that the environment is ever-changing that status of your order may change, including for example the time from submission of order to delivery/performance. We will use all commercially reasonable efforts to notify you as soon as possible of any change. So perhaps something along those lines? Our sales and executive teams seem pleased that we are addressing it directly.

I would say yes. This 'Act of God' is causing many companies to shut-down temporarily.

• GKN Aerospace
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2020-02-18 13:29:30

Yes - in most cases it will be ( unless of course the contract excludes medical issues or similar)

• Norfolk County Council
•
2020-02-18 15:46:34

Might be worth considering what your response was to previous pandemic flu etc and treating similarly

• Capgemini
•
2020-02-20 20:32:38

yes, I considered a supervening fact, would be impossible to predict the existence and its effects when signing a Contract...

• Petronas
•
2020-03-06 08:23:39

for me it depends, if the party is from Wuhan, China where the local authorities have declared shutdown or curfew then it may be considered. however if the party is from somewhere not directly impacted with the virus then No. They need to show evidences of the impact which is hindering their obligation to perform the work.

• Pacific Gas and Electric Company
•
2020-03-29 03:53:29

I would describe COVID-19 as an unforeseeable event. It would depend on the nature of a unique good or service to determine if a force majeure clause would apply.

•
2020-04-30 20:39:27

All depends on how your Force Majeure paragraph is drafted. Is your company qualified as "essential?" That could also come into play as well.

I note your profile refers to "Moreland City Council", I assume Melbourne (Australia).

Note - this response references 'UK' practice and legislation, different rules may well apply in your jurisdiction.

In the UK consideration would need to be given as to whether the contract was let under a government framework (or similar 'public procurement rules'), if so there may well be restrictions in place as to whether you could extend further.

If it is under a Framework, in the UK you would need to offer a 'Direct Award' extension (if permitted). If it is 'non-framework' then you would almost certainly be able to extend subject to agreement with the supplier.

Assuming you can extend, doing so after the previous contract has expired is generally permissible as long as both parties agree; for 'neatness' I would suggest that the extension applies with 'retroactive effect' from the day the previous contract expired, so there aren't any 'uncovered periods'.

Hope this helps

NOTE: you need to be wary of anti-bribery and corruption laws - extending 'expired' contracts rather than running a competitive procurement process often leads to concerns being raised - you may well need to demonstrate that this is very much an 'interim and last resort' measure as a precursor to a full competitive procurement process.

• Victorian Council - Australia
•
2020-01-22 02:12:10

Thank you, Steve
Thank you for the prompt reply!

I agree with your comments

Victoria's IBAC (anti-Corruption body) highlighted that as one of the red flags for corruption
www.ibac.vic.gov.au/preventing-corruption/are-you-vulnerable-to-corruption/procurement

Generally speaking, we do not extend contracts beyond their expiry dates, especially if all extensions have been exhausted.

I am coming to these special and few cases that we have to manage. I am trying to balance commercial needs and legal exposure if any.

• smcv
•
2020-03-04 12:17:11

Of course it depends on the legislation of each country.

In my case we have gone from avoiding having extensions or addenda to contracts to try as a first option to extend the contract through an addendum since there are many associated advantages such as having a long-term collaborative relationship with the contractor. Manjeand the risk of corruption we have achieved very good agreements to extend contracts.

Product replacement or discontinuation is obviously quite usual - but that doesn't alter warranty obligations. The manufacturer should have stocked sufficient to meet likely needs. Without knowing the value. It is hard to know whether it is worth pursuing them; right now it sounds like they are ignoring you in the hope you just give up.

• N.M.I.A.L.
•
2019-11-18 11:10:39

Hi Tim,

Thanks for your viewpoint and I couldn't agree more with you on this.

However, they have actually discontinued the product and their revised e-catalogue confirms this. I am sure they understand that a Purchase Order from us would just add on to their revenue in multiples at best, to risk such ignorance. Of the 28 product categories they have supplied, the issue affects only 1 of the 28.

The query deals around with
(a) non availability of spare parts of the product and
(b) non availability of the product itself.

• Isle of Man Government
•
2020-01-09 15:26:31

Experience suggests this will boil down to the terminology used within your warranty document. It may be unreasonable to expect a supplier to maintain full stocks for all warranty potential on discontinued products (Tim already mentioned value...). More commonly, suppliers offer repair or replacement with the direct alternative product. If the 'standard' warranty were considered unacceptable at the outset it would be appropriate to develop the warranty model to include a recommended spares holding based upon MTBF, or more onerously full replacement of the product range used including mobilisation costs. Either way both parties are fully aware of expectations and obligations from the outset.
Contractually speaking if the warranty document is deficient you are really only left with negotiation. An option being to approach the supplier for access to the original product production drawings and look to have bespoke replacements made.
As a compromise and considering the actual failure rate seems quite low (5# out of 1500#) - though in no way trying to belittle the frustration you must feel - are there visual aspects where use of the replacement product may be viable and use the original products from those locations for the more visible locations ?

1) Yes. It often happens when the parties reject delay and extra costs to each other. It also happens that each party terminates the contract because of the the other party breaches.

2) Provided that this clause is valid (client's client delay is not client's responsibility), I would depend of the existence of a "time is of the essence clause" and upon the governing law.

• Rajit Padmakant Consultants Pvt Ltd
•
2019-09-21 08:34:54

1. Reply - Yes It happens when contractor's payment is to be made based on milestone basis and where delay from contractor's side concurrently delay from employer's side also during contract administration stage both parities contracts manager and PM don't sit to-gather to establish the delay attributed to which party, on other hand employer want the work to be completed with in laid completion dates. with found delay employ deploys third party manpower to complete work and adjust this cost from Contractor's Accounts under Employer's Claims.

2. Reply - can be replied based on type of contract is formed.

You can reach me offline over the email: pm@rpcpl.com (Rajit Shah - Founder and Director, RPCPL)

Are the contracts customer contract? Perhaps it may be useful to present the contracts based on the unexpired residue of the term left and whether or not the consent of the customer is required (for assignment). Are the contracts being assigned to a third party? Will the customer have to consent to the assignment?
If you are terminating the contract, you may need to look at the requirements under the term of the contract that will allow you to terminate without liability.
Chandra